VA's Pharmacy Prime Vendor Contract with McKesson Corporation Reached $33.4M in FY2017

Contract Overview

Contract Amount: $33,375,182 ($33.4M)

Contractor: Mckesson Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-09-01

End Date: 2017-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.2M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV) FY2017 SEP

Place of Performance

Location: DURHAM, DURHAM County, NORTH CAROLINA, 27701

State: North Carolina Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $33.4 million to MCKESSON CORPORATION for work described as: EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV) FY2017 SEP Key points: 1. The Department of Veterans Affairs (VA) awarded a $33.4M delivery order under the Pharmacy Prime Vendor (PPV) program. 2. McKesson Corporation, a major player in pharmaceutical distribution, was the awardee. 3. The contract utilized full and open competition, suggesting a competitive bidding process. 4. The spending occurred in September 2017, a single month, indicating a specific operational need or period.

Value Assessment

Rating: good

The award amount of $33.4M for a single month's delivery order under the PPV program appears substantial. Benchmarking against similar large-scale pharmaceutical distribution contracts would be necessary for a precise pricing assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically allows for the widest range of potential bidders and can lead to more competitive pricing. The specific price discovery mechanism within this competitive process is not detailed.

Taxpayer Impact: The competitive nature of the award suggests that taxpayers likely benefited from a fair market price for pharmaceutical supplies procured through this contract.

Public Impact

Ensures access to essential pharmaceuticals for veterans. Supports the VA's mission to provide healthcare services. Highlights the significant role of large distributors in government healthcare. Demonstrates ongoing government reliance on established vendors for critical supplies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Single month award may indicate fluctuating demand or specific procurement cycles.
Lack of detail on specific pharmaceuticals procured limits understanding of value.
High contract value warrants scrutiny of unit pricing and overall cost-effectiveness.

Positive Signals

Full and open competition promotes market fairness.
Award to a known, large vendor suggests reliability in supply chain.
Contract supports critical healthcare needs for veterans.

Sector Analysis

The pharmaceutical distribution sector is characterized by large, established players like McKesson. Government contracts, particularly for healthcare, represent a significant portion of this market. Spending benchmarks for similar VA pharmaceutical contracts would provide further context.

Small Business Impact

This contract was awarded to McKesson Corporation, a large business. There is no indication of small business participation in this specific delivery order, which is common for large-scale prime vendor contracts.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Standard procurement regulations and oversight mechanisms would apply to ensure compliance and accountability.

Related Government Programs

Pharmaceutical Preparation Manufacturing
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

High single-month expenditure warrants further investigation into necessity and efficiency.
Lack of detailed product-level data hinders granular cost analysis.
Potential for price fluctuations in pharmaceutical markets.
Dependence on a single large vendor for a broad range of pharmaceuticals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $33.4 million to MCKESSON CORPORATION. EXPRESS REPORT: PHARMACY PRIME VENDOR (PPV) FY2017 SEP

Who is the contractor on this award?

The obligated recipient is MCKESSON CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $33.4 million.

What is the period of performance?

Start: 2017-09-01. End: 2017-09-30.

What was the specific breakdown of pharmaceutical products and their associated costs within this $33.4M delivery order?

The provided data does not detail the specific pharmaceutical products or their individual costs within the $33.4M delivery order. Understanding this breakdown is crucial for a comprehensive value assessment, as it would reveal which drug categories were prioritized and their respective price points, allowing for comparison against market rates and potential identification of cost-saving opportunities.

How does the per-unit cost of key pharmaceuticals in this order compare to the VA's average or other federal agency benchmarks?

Without specific product data, a direct per-unit cost comparison is not possible. However, given the scale of the Pharmacy Prime Vendor program, it is expected that the VA negotiates significant volume discounts. A thorough analysis would involve comparing the unit prices of high-volume drugs against GSA schedules, other agency contracts, or industry benchmarks to identify any potential price variances or areas for cost optimization.

What mechanisms were in place to ensure cost-effectiveness and prevent overspending during the execution of this delivery order?

The contract utilized 'full and open competition,' which is a primary mechanism for ensuring cost-effectiveness by encouraging multiple bids. Additionally, the 'firm fixed price' contract type shifts cost risk to the contractor. However, ongoing oversight by the VA would be necessary to monitor delivery performance, ensure adherence to negotiated prices, and address any potential issues that could lead to cost overruns.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ONE POST ST, SAN FRANCISCO, CA, 94104

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $33,375,182

Exercised Options: $33,375,182

Current Obligation: $33,375,182

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA797P12D0001

IDV Type: IDC

Timeline